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FINANCIAL REPORTING ENVIRONMENT - Coggle Diagram
FINANCIAL REPORTING ENVIRONMENT
Reference
Reference 2
Regulators body and Enforcement Authorities
Purpose
Reducing information disparity and protecting public interest
Regulators are synonymous with Government who uses Company Law to regulate the content and format of financial statements.
Regulatory bodies
formed under the terms of an Act
They impose
requirements, restrictions and conditions, setting standards in relation to securing, enforcement and compliance
The example are
Malaysian Institute of Account (MIA), Bank Negara Malaysia (BNM) and Securities Commission Malaysia(SC)
Play role in supporting financial reporting process
Corporations of Preparation of Financial Statements
Purpose
Public and Investor relations help in communicating the financial and operating performance
The preparers of the financial statement by this paper are the accountants of the reporting entity (representing management) and accounting firm (serving as auditors)
The accountants of the reporting entities are involved in the preparation of the financial reports, while the auditors are appointed to examine and certify those reports as “true and fair” representation of financial position of the reporting entities or not.
The preparers
prepare financial statements by applying IASB standards and IFRS standard
to
ensure high quality and comparable information
in financial reporting to
helps
the users and other participants in world's capital market to
make economic decisions
.
to create
better understanding to the accounting information usefulness
by inquiring into preparers` main motives for
preparing the information in accordance with statutory requirements
Users and other participant in world capital market
Purpose
Help in decision making
Decision by
users such investors, lenders and other creditors
depend on expectation about return and their assessment of amount, timing and uncertainty for future net cash flows to the entity.
the users need information about the resources of entity, claims against entity and
how efficiently and effectively
the entity's management and governing boards to use entity's resources
Accounting information that is useful must possess the primary qualities
(relevance and reliability)
, secondary qualities
(comparability and neutrality)
, and other qualities
(materiality, understandability and timeliness)
. This information is to be produced by accountants and certified by auditors before it is made available to users.
Quality of
Financial Reporting
Financial Reporting Environment in Malaysia